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Should Investors Start Lining Up For North Korea?

Kim

One of the most telling statements from Trump’s summit with North Korean leader Kim Jong Un in Singapore in which he complimented the rogue nation’s fabulous beaches, noting that they would be great locations for condos and hotels.

"As an example, they have great beaches. You see that whenever they're exploding their cannons into the ocean. I said, 'Boy, look at that view. Wouldn't that make a great condo,?'" Trump said.

It may have been an odd observation concerning a missile launch, but the take home here is the potential value in opening up a brand new venue for virtually everything: Virgin North Korea.

Indeed, when talking to reporters, Trump appeared to be suggesting that real estate could be the key to North Korea's economic development.

"Think of it from a real estate perspective. You have South Korea, you have China, and they own the land in the middle. How bad is that, right? It's great."

U.S. investment mogul Mark Mobius thinks that the potential opening up of North Korea's economy could mean massive commercial opportunities. He thinks investors should be lining up on this one. And it goes far beyond condos and hotels—the country will need an total infrastructure update, for everything from power grids and transportation.

None of it will be possible without capital from international investors. Related: Bitcoin Struggles Following Manipulation Claims

“The consumption revolution will take place once the standard of living begins to move up. So, at the beginning it would be the resources and the transport – railroads, roads going up North to China and Russia,” Mobius told CNBC TV.

And for investors, there will be a significant amount of allure when it comes to North Korea's large, disciplined and relatively cheap workforce.

In terms of natural resources, it certainly not all about beaches, either.

North Korea potentially has trillions of dollars' worth of natural resources, with estimates that the country's mineral reserves could be worth $6 trillion. But they’ve always been off limits to miners due to sanctions. The real question is whether any Western figures could get in there, and past the Chinese who tend to offer governments much more lucrative deals in order to establish a foothold that is political in nature.

But it’s still very early days, and no one has any idea whether the circus-like summit in Singapore will lead to any real opening up of North Korea, let alone disarming the rogue nation.

Trump’s real estate promotion aside, analysts seem to largely believe that US investors would refrain from flocking to North Korea; partly because of the massive uncertainty and partly because of geopolitics.

Not so for China and South Korea, who will be at the front of this investment line. South Korea has already offered concessions of aid and trade as part of potential peace deals.

But nothing will happen anytime soon. The June 12 summit in Singapore was anything but definitive. Two days later,  U.S. Secretary of State Mike Pompeo said China had committed to maintaining UN sanctions on North Korea for the time being, as Washington lobbies for support to speed up the disarming of the rogue nation. The pressure has to stay on, or the summit could lose whatever momentum it may have gained.

For now, any mouth-watering North Korean beaches will have to be contemplated from afar.

By Damir Kaletovic for Safehaven.com

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